The individual actively involved in the microbusiness must file an application, which describes their involvement, the expected investment or employment growth, and the tentative tax credits for the year of application and the following year. Each individual, and any related parties, are limited to a $10,000 lifetime tax credit.
Application for Nebraska Advantage Microenterprise Tax Credit Act
Applications requesting up to $2 million may be authorized for each calendar year.
The individual earns a refundable income tax credit equal to 20% of the microbusiness' new investment or employment, not to exceed the amount of tentative tax credits approved based on the application. New investment is an increase in purchases of buildings and depreciable assets, repairs and maintenance, advertising, legal, or professional services in the year of application and the following year, as compared to the year prior to application. New employment is an increase in employee compensation and the employer cost of health insurance in the year of application and the following year, as compared to the year prior to application. The individuals claim the tax credit when filing their Nebraska income tax return.
The microbusiness must have five or fewer full-time equivalent (FTE) employees at the time of application to participate in the Nebraska Advantage Microenterprise Tax Credit Act. For applications filed on or after October 1, 2009, taxpayers must utilize E-verify to verify that new employees are legally able to work in the United States.